As global Treasury yields rise, there are claims that growth rates may have a greater impact on the stock market than U.S. Treasury yields. Analysts suggest that if the benefits of increased corporate profits outweigh the burdens of rising interest rates, stock prices could rise.
On September 30, during the 'Korea Premium Week 2026' event held by the Financial Services Commission and the Korea Exchange in Yeongdeungpo, Seoul, discussions on the recent stock market trends took place. On the same day, the New York Stock Exchange saw all three major indices close lower as the yield on 30-year Treasury bonds surpassed 5.6%, increasing market tension.
Yeom Seung-hwan, an executive at LS Securities, expressed that the concerns are excessive. He stated, "You cannot determine the direction of the U.S. stock market by looking solely at interest rate figures. If the nominal GDP growth rate in the U.S. is higher than the yield on 10-year Treasury bonds, the stock market can continue to rise." He noted that the nominal GDP in the U.S. increased by 6.3% in the first half of this year compared to the same period last year, which is about 1 percentage point higher than the 10-year Treasury yield (around 5.2%).
Yeom also highlighted the productivity improvements driven by artificial intelligence (AI). He remarked, "The phenomenon of the stock market collapsing due to rising interest rates does not align with today's AI era. For the stock market indices to fall, we would need to see reduced corporate investment and a contraction in consumer spending in the real economy. However, in a situation where productivity is dramatically enhanced by AI, investments are not decreasing."
There were also opinions emphasizing the importance of the speed of change in Treasury yields rather than their absolute levels. Oh Geon-young, head of Shinhan Bank's Premier Business Division, stated, "We should not only look at Treasury yields but also consider the country's growth rate. It is essential to pay attention to how long the upward trend lasts and how quickly it rises, rather than just the yields themselves."
Analysts also suggested that the U.S. federal government will focus on growth to alleviate its debt burden. As of last month, the national debt of the U.S. federal government surpassed $40 trillion due to fiscal deficits and rising interest rates, a fourfold increase from about $10 trillion after the financial crisis.
Oh added, "To address the national debt issue, governments worldwide are either reducing debt or boosting growth, and the method chosen by the U.S. is to enhance productivity through AI." He assessed that the U.S. government has no choice but to bet on the AI revolution. Yeom also noted, "The U.S. approaches the AI revolution as a matter of national survival, aiming to outpace its competitor, China."
Looking ahead to next year, 'inflation' was identified as a key theme for the stock market. Oh stated, "From the second half of this year into next year, inflation is expected to be a central theme in the economy. The Federal Reserve is particularly wary of the risk of inflation becoming entrenched," predicting that Fed Chair Kevin Warsh will opt for gradual rate increases before inflation becomes entrenched.
The Fed has kept the possibility of further rate hikes open this year. According to the CME FedWatch on the same day, the market sees a greater than 45% chance that the Fed will raise rates at the upcoming Federal Open Market Committee (FOMC) meeting in October.
On September 30, during the 'Korea Premium Week 2026' event held by the Financial Services Commission and the Korea Exchange in Yeongdeungpo, Seoul, discussions on the recent stock market trends took place. On the same day, the New York Stock Exchange saw all three major indices close lower as the yield on 30-year Treasury bonds surpassed 5.6%, increasing market tension.
Yeom Seung-hwan, an executive at LS Securities, expressed that the concerns are excessive. He stated, "You cannot determine the direction of the U.S. stock market by looking solely at interest rate figures. If the nominal GDP growth rate in the U.S. is higher than the yield on 10-year Treasury bonds, the stock market can continue to rise." He noted that the nominal GDP in the U.S. increased by 6.3% in the first half of this year compared to the same period last year, which is about 1 percentage point higher than the 10-year Treasury yield (around 5.2%).
Yeom also highlighted the productivity improvements driven by artificial intelligence (AI). He remarked, "The phenomenon of the stock market collapsing due to rising interest rates does not align with today's AI era. For the stock market indices to fall, we would need to see reduced corporate investment and a contraction in consumer spending in the real economy. However, in a situation where productivity is dramatically enhanced by AI, investments are not decreasing."
There were also opinions emphasizing the importance of the speed of change in Treasury yields rather than their absolute levels. Oh Geon-young, head of Shinhan Bank's Premier Business Division, stated, "We should not only look at Treasury yields but also consider the country's growth rate. It is essential to pay attention to how long the upward trend lasts and how quickly it rises, rather than just the yields themselves."
Analysts also suggested that the U.S. federal government will focus on growth to alleviate its debt burden. As of last month, the national debt of the U.S. federal government surpassed $40 trillion due to fiscal deficits and rising interest rates, a fourfold increase from about $10 trillion after the financial crisis.
Oh added, "To address the national debt issue, governments worldwide are either reducing debt or boosting growth, and the method chosen by the U.S. is to enhance productivity through AI." He assessed that the U.S. government has no choice but to bet on the AI revolution. Yeom also noted, "The U.S. approaches the AI revolution as a matter of national survival, aiming to outpace its competitor, China."
Looking ahead to next year, 'inflation' was identified as a key theme for the stock market. Oh stated, "From the second half of this year into next year, inflation is expected to be a central theme in the economy. The Federal Reserve is particularly wary of the risk of inflation becoming entrenched," predicting that Fed Chair Kevin Warsh will opt for gradual rate increases before inflation becomes entrenched.
The Fed has kept the possibility of further rate hikes open this year. According to the CME FedWatch on the same day, the market sees a greater than 45% chance that the Fed will raise rates at the upcoming Federal Open Market Committee (FOMC) meeting in October.
* This article has been translated by AI.
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